Federal antitrust policy and physician discontent: defining moments in the struggle for congressional relief

Organized medicine has battled the Federal Trade Commission (FTC) since the 1970s over enforcement of the antitrust laws. Physicians' discontent stems from the belief that federal policy allows managed care organizations to achieve dominance in health care markets just as it discourages physicians from taking collective action to protect their interests. This article examines two important efforts by organized medicine over a twenty-year interval to alter federal antitrust policy. In 1982, physicians and other professionals sought a special exemption from FTC jurisdiction; beginning in 1998, physicians promoted legislation that would exempt independent practitioners from the antitrust laws for collective bargaining purposes. Both initiatives passed in the House of Representatives but failed in the Senate. This article uses an advocacy coalition framework to reinterpret the events and to assess the reasons for legislative failure. The evidence suggests that in both instances, although twenty years apart, consumer groups and federal bureaucrats determined the outcome in favor of corporate medicine.     

The new structure of individual practice associations

There are two types of HMOs: prepaid group practices (PGPs) and individual practice associations (IPAs). Because of rapid change in the HMO industry, the academic literature, which is based primarily on data from the 1970s, is dated in several ways. The literature has focused on PGPs, but IPAs are growing three times faster than PGPs and are likely to dominate the HMO industry in the near future. The literature indicates that a small proportion of an IPA physician's practice is capitated, but such practices often are as much as one-third capitated. And while the literature indicates that IPA physicians are rarely given financial incentives to control cost, such incentives are now common. In this decade IPAs have cut their hospital days per thousand enrollees. Furthermore, IPAs in which individual physicians or medical groups bear some of the financial risk of hospital costs appear to have the same rate of hospital days as PGPs. Additional research is especially needed on cost and quality of care in modern IPAs.     

From clinical integration to accountable care

Four key challenges to reforming health care organizations can be addressed by a clinical integration model patterned after Advocate Physician Partners (APP). These challenges are: predominance of small group practices, dominant fee-for-service reimbursement methods, weaknesses of the traditional hospital medical staff structure and a need to partner with commercial insurance companies. APP has demonstrated teamwork between 3800 physicians and hospitals to improve quality, patient safety and cost-effectiveness. Building on this model, an innovative contract with Blue Cross Blue Shield of Illinois serves as a prototype for a commercial Accountable Care Organization. For this contract to succeed, APP must outperform the market competition. To accomplish this, APP has implemented strategies to reduce readmissions, avoid unnecessary admissions and emergency room visits, expand primary care access, and enhance quality and patient safety.     

Physician payment and cost-containment strategies in West Germany: suggestions for Medicare reform

The West German health care system pays ambulatory care physicians on a fee-for-service basis but employs a national relative value scale and regional capitation-based revenue pools to achieve expenditure controls on total physician reimbursement. Physician-controlled organizations manage these pools and conduct utilization reviews on their own members. The capitation rates are determined by negotiations between the physician associations and health insurers. The West German government has been able to exert some influence on the outcome of these negotiations through a quasi-governmental advisory body. Aspects of this structure could be adopted by Medicare in order to determine conversion factors for resource-based relative value scales or to create expenditure control and incentive structures for Medicare-participating physicians.     

The Department of Health and Human Services issues proposed regulations on physician incentive payments by hospitals

Hospitals tempted to operate their own physician incentive plans are reminded that, under OBRA 1986, they are precluded from paying physician incentives of any kind to reduce or limit Medicare or Medicaid covered services. In light of the proposed regulations and the guidance of the preamble, hospitals should review their incentive plans to determine whether physicians providing direct patient care are receiving prohibited payments. Further, supervising physicians who are receiving incentives for certain hospital departments may not influence direct care over patients served by those departments, even through other physicians. Some risk may also exist if incentives are based on a formula that considers patients of the supervising physician's medical group. Finally, it may be useful to develop a utilization and quality of care review program specifically designed to assure that patient undertreatment does not occur as a result of any supervising physician incentive program.     

Will physician unions improve health system performance?

In the public debate over the extension of collective bargaining rights to independent physicians, union proponents' primary argument has been that patients would benefit from allowing physicians to bargain collectively with health plans. This article examines the likely effects of physician unions on the U.S. health care system. Specifically considered are likely effects on economic efficiency, quality, access, and cost. Under none of these criteria are physician unions likely to improve health system performance, particularly when compared with available alternative strategies for dealing with problems identified by union proponents.     

Medicare Program; establishment of the Medicare+Choice Program--HCFA. Interim final rule with comment period

The Balanced Budget Act of 1997 (BBA) establishes a new Medicare+Choice (M+C) program that significantly expands the health care options available to Medicare beneficiaries. Under this program, eligible individuals may elect to receive Medicare benefits through enrollment in one of an array of private health plan choices beyond the original Medicare program or the plans now available through managed care organizations under section 1876 of the Social Security Act. Among the alternatives that will be available to Medicare beneficiaries are M+C coordinated care plans (including plans offered by health maintenance organizations, preferred provider organizations, and provider-sponsored organizations), M+C "MSA" plans, that is, a combination of a high deductible M+C health insurance plan and a contribution to an M+C medical savings account (MSA), and M+C private fee-for-service plans. The introduction of the M+C program will have a profound effect on Medicare beneficiaries and on the health plans and providers that furnish care. The new provisions of the Medicare statute, set forth as Part C of title XVIII of the Social Security Act, address a wide range of areas, including eligibility and enrollment, benefits and beneficiary protections, quality assurance, participating providers, payments to M+C organizations, premiums, appeals and grievances, and contracting rules. This interim final rule explains and implements these provisions. In addition, we are soliciting letters of intent from organizations that intend to offer M+C MSA plans to Medicare beneficiaries and/or to serve as M+C MSA trustees.     

How physicians' organizations compete: protectionism and efficiency

This article develops a framework that distinguishes four types of competitive strategies that physicians' organizations can adopt in their interactions with health plans. Two types of strategies protect physicians' incomes and autonomy from incursion and control by insurers; the other two enhance the efficiency of health care markets by controlling costs and embedding physicians' caregiving in a community of professionals. The mix of strategies that each organization adopts at any given time depends on the market conditions and regulatory policies it faces, as well as its organizational capacity. The article reviews recent developments in the field that indicate that today's markets and regulations create neither the pressures nor the capacity for physicians' organizations to adopt strategies that enhance efficiency. The managed care backlash has led to a relaxation of pressures to control costs, and the lack of a business case for quality has discouraged embedded caregiving. These developments instead have encouraged and enabled physicians' organizations to adopt strategies that protect their members from the bargaining power and micromanagement of health plans. The article therefore proposes changes in purchasing and regulatory policies to alter the pressures and improve the capacity of physicians' organizations to pursue efficiency and eschew protectionism.     

The ethics of managed care: a dose of realism

This article examines the ethics of medical practice under managed care from a pragmatic perspective that gives physicians more useful guidance than existing ethical statements. The article begins by stating the authors' starting premises and framework for constructing a realistic set of ethical principles: namely, that bedside rationing in some form is permissible; that medical ethics derive from physicians' role as healers; that actual agreements usually trump hypothetical ones; that ethical statements are primarily aspirational, not regulatory; and that preserving patient trust is the primary objective. The authors then articulate the following concrete ethical guides: financial incentives should influence physicians to maximize the health of the group of patients under their care; physicians should not enter into incentive arrangements that they would be embarrassed to describe accurately to their patients or that are not in common use in the market; physicians should treat each patient impartially, without regard to source of payment, and in a manner consistent with the physician's own treatment style; if physicians depart from this ideal, they must tell their patients honestly; and it is desirable, although not mandatory, to differentiate medical treatment recommendations from insurance coverage decisions by clearly assigning authority over these different roles and by having physicians to advocate for recommended treatment that is not covered.     

The unintended consequences of New Zealand's primary health care reforms

In 2001, the New Zealand government commenced a program to reform the organization of publicly funded primary care services. While there have been several positive results of this reform, including the reduction of patient co-payments and the extension of the range of primary care services, the government's program was a hastily implemented attempt to place primary care, the delivery of which is dominated by private doctors, under firm state control. It was also an attempt to override preexisting arrangements. As such, the government succeeded in its goal of establishing new primary health organizations (PHOs), but there were also significant unintended consequences. As detailed in this article, these consequences include (1) the creation of a labyrinthine funding and organizational system with a variable capacity to deliver on the government's reform objectives, (2) an increase in the power and scope of preexisting doctor organizations combined with a government unable to wrest control over the setting of patient co-payment levels, and (3) an emerging lack of clarity about future directions for the primary health care sector.     

Commercialization of genetic testing services: the FDA, market forces, and biological tarot cards

Many women fear being diagnosed with breast cancer, and rightfully so. Despite the capabilities of modern medicine, the cumulative lifetime risk of getting the disease has risen to one in eight and, despite decades of research, no cures exist. In this Article, the authors explore the commercialization of so-called breast cancer gene tests, based upon genetic alterations linked to the disease. Although the authors fully address this specific technology, they use what constitutes the seminal case of predictive genetic testing to analyze the adequacy of the existing regulatory framework. The authors conclude that the present regulatory system is inadequate and places a dangerous amount of reliance on primary care physicians. Their conclusion is grounded in the observation that most primary care physicians lack sufficient knowledge about this evolving investigative technology--which is highly subject to misinterpretation, and, though potentially helpful to some "high risk" patients, offers questionable clinical value for the general public. The authors set forth numerous proposals to promote both the quality and clinical value of predictive genetic testing so that it conforms to public health standards and can be properly integrated as a reliable component of medical care in specific situations.     

Health insurance without provider influence: the limits of cost containment

In our previous paper, we showed that market forces can play a significant role in controlling health care costs and that a considerable amount of cost containment effort was pursued by third-party insurers in Oregon in the 1930s and 1940s. Although physicians were able to thwart this cost-control effort, a 1986 Supreme Court decision, FTC v. Indiana Federation of Dentists, found that a boycott of insurers by dentists violated Section 5 of the Federal Trade Commission Act. Further investigation of recent developments, including the recent Wickline v. California decision, indicates that the primary barriers to cost containment today are not obstructive tactics by providers or provider-controlled health insurance plans. Rather, the primary barriers are increases in the development and diffusion of new technology and society's apparent preference for paying for new tests and procedures regardless of economic efficiency.     

An integrated delivery systems review: common problems to be addressed

The most critical element in developing a successful IDS is identifying the needs and goals of the parties within the context of the realities of their local health care market. It is therefore unwise to select the structure of a proposed IDS until this process has been completed. An honest goals assessment might result in the immediate formation of a PHO, MSO, medical foundation or other formal IDS, or might alternatively point in the direction of something much less structured, such as a joint marketing contractual arrangement (sometimes called a "PHA"), which can be relatively inexpensive to implement and can provide a fairly immediate response to quickly changing market conditions. Some organizations might even decide to utilize a number of different IDS vehicles in order to offer physicians a menu of affiliation options. The legal issues that arise when forming an IDS can almost always be dealt with in a reasonable manner. The real key to success is entering into integration discussions with an open mind, rather than a preconceived commitment to a particular integration.     

Extending due process protections in managed care credentialling to hospital privileges

The Article analyzes two recent state court decisions granting due process rights to physicians deselected from managed care networks. The author applauds these decisions and argues that managed care organizations wishing to deselect a physician should be required to demonstrate (1) that they have a legitimate reason for doing so relating to quality of care, economic factors, or administrative considerations, and (2) that the deselection will not unduly affect the quality of healthcare available in the network. In addition, the author contends that these same due process requirements may be applied to the closely analogous area of hospital staff privileges in situations in which the privileges of hospital-based practitioners are tied to employment, or the grant or termination of exclusive contracts.     

Solicitation of information and recommendations for developing OIG compliance program guidance for certain Medicare+Choice organizations--OIG, HHS. Notice

This Federal Register notice seeks the input and recommendations of interested parties into the OIG's development of a compliance program guidance for Medicare+Choice organizations that offer coordinated care plans (M+CO/CCPs). The OIG has previously developed compliance program guidances for hospitals, clinical laboratories and home health agencies in order to provide clear and meaningful guidance to those segments of the health care industry. In an effort to provide similar guidance to certain M+C organizations, we are soliciting comments, recommendations and other suggestions from concerned parties and organizations on how best to develop compliance program guidance and reduce fraud and abuse within M+CO/CCPs.     

Physicians' conflicts of interest in Japan and the United States: lessons for the United States

Japanese health policy shows that even with physician ownership and the absence of for-profit, investor-owned health care, physicians' conflicts of interest thrive. Physician dispensing of drugs and ownership of hospitals and clinics were justified in Japan as ways to avoid commercialization of medicine. Instead, they create physicians' conflicts and fuel patient overuse of services. Japan's Ministry of Health and Welfare (MHW) has responded by introducing per-diem payment, thereby creating incentives to decrease services in ways similar to those of American managed care organizations, but with none of their benefits, such as coordination of care, oversight of physicians practices, and quality assurance. Although the United States and Japanese health care systems are organized and financed differently there is convergence in the source of their physicians' conflicts and the way they are addressed. The United States is starting to integrate institutional and physician payment and align their incentives, in a traditional Japanese way. In so doing, the United States creates new physicians' conflicts and reduces the role of countervailing incentives and power, an advantage of previous policy. Japan, in turn, has combined incentives to increase and decrease services, thus moving closer to the U.S. policy.     

Medicaid program; Medicaid managed care--HCFA. Proposed rule

This proposed rule would amend the Medicaid regulations to allow the States greater flexibility by giving them the option to require Medicaid recipients to enroll in managed care entities without obtaining waivers. These revisions, which are authorized by the Balanced Budget Act of 1997, would establish new beneficiary protections in areas such as quality assurance, grievance rights, and coverage of emergency services. They would eliminate certain requirements viewed by State agencies as impediments to the growth of managed care programs, such as the enrollment composition requirement, the right to disenroll without cause at any time, and the prohibition against enrollee cost-sharing. They would also permit State agencies to amend their State plans to require enrollment in managed care organizations subject to certain conditions, including limits on whose enrollment can be mandated, and a requirement for beneficiary choice. In addition, this rule would extend most of these new requirements to prepaid health plans.     

Releasing managed care's chokehold on healthcare providers

This article addresses the imbalance of power between managed care organizations and physicians regarding the content of treatment information given to patients. The author provides a thoughtful discussion surrounding informed consent issues in a managed care environment, and how managed care organizations maintain their control over physicians. The author concludes by offering varied and insightful methods to even out the disparity of power.